Court Hears the Forced-Labor Tariff Challenge September 30 — What 25 States and Two Small Importers Are Arguing

Just as the dust was settling on this summer's tariff whiplash, a new fight over presidential tariff authority is headed back into a Manhattan courtroom. On September 30, 2026, the Court of International Trade (CIT) is scheduled to hear oral argument in a consolidated challenge to the Section 301 "forced labor" tariffs that have been quietly adding 10% to 12.5% onto entries from roughly 60 countries since late July. If you're importing from anywhere outside a short list of exempted trading partners, this case is worth watching closely — it could determine whether you get a refund on duties you're paying right now.

What Happened

The tariffs at issue trace back to March 12, 2026, when the U.S. Trade Representative opened Section 301 investigations into 60 economies over their failure to impose and effectively enforce a ban on importing goods made with forced labor. USTR moved fast: a determination of "actionable" conduct followed on June 2, 2026, and on July 23, 2026 Ambassador Jamieson Greer announced final action, with tariffs taking effect the very next day. According to USTR's July 23, 2026 press release and the underlying Federal Register notice of action, the agency set two tiers: a 10% duty for economies that already ban forced-labor imports, have committed to doing so under an Agreement on Reciprocal Trade, or run a partial enforcement regime (Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom), and 12.5% for every other investigated economy — with the European Union, Japan, South Korea, Switzerland, and Taiwan facing rates set relative to their MFN duty. Certain raw materials and supply-constrained goods are exempted.

The timing did not go unnoticed. The Section 301 duties landed on exactly the day the temporary Section 122 balance-of-payments tariffs expired by law — the same tariffs the CIT had already found unlawful in an earlier case. Two small importers, represented by the Liberty Justice Center, sued that same afternoon. On August 3, 2026, a coalition of twenty-five state attorneys general led by Oregon filed a second complaint at the CIT, State of Oregon v. Trump (Court No. 26-03467). Both complaints make a similar core argument: that Section 301 does not authorize a blanket, near-universal tariff scheme dressed up as a forced-labor remedy, that the investigation and rate-setting were rushed and internally inconsistent, and that the real purpose was to preserve the revenue stream from the tariffs the court had just struck down.

What It Means for Importers

For now, the tariffs stand. Nothing about pending litigation suspends collection — CBP is assessing the 10% or 12.5% duty at entry exactly as USTR's notice directs, on top of any MFN, Section 301 China, or Section 232 duties that already apply to the same product. If your supply chain touches any of the 60 named economies and your goods aren't on the exemption list, you are paying this duty today, win or lose in court later.

That's the part worth sitting with. We've covered this pattern before with the IEEPA refund litigation: when a court eventually rules a tariff unlawful, CBP has consistently taken the position that only importers who are plaintiffs of record — or who separately protested — are entitled to refunds. Importers who paid the duty and did nothing procedurally are frequently left waiting on appeals or separate rulemaking, sometimes for a year or more. The Section 338 Canada tariffs we wrote about in September are a reminder that this administration's tariff authority keeps getting challenged and keeps getting reused under different statutes; Section 301 forced-labor duties are simply the newest vehicle, and the litigation defending them is following an increasingly familiar script.

Practical Next Steps

1. Identify your exposure by country and HTS line. Pull every entry since July 24, 2026 where a Section 301 forced-labor duty was assessed, and confirm whether your goods fall under an exemption category (raw materials, supply-constrained products, or country-specific carve-outs).
2. File a protest or preserve your rights before the 180-day clock runs. Whether or not you join active litigation, a timely CBP protest on affected entries keeps a refund option open if the CIT ultimately rules against the tariffs.
3. Talk to trade counsel about whether to join the litigation. Given CBP's track record on refund eligibility in the IEEPA cases, plaintiff status could matter as much as the underlying legal outcome.
4. Watch September 30 closely, but plan for a slow resolution. Oral argument is not a ruling. Expect briefing, a written decision, and likely an appeal regardless of who wins — budget your landed costs on the assumption these duties are here for the foreseeable future.
5. Reconcile stacking carefully. The forced-labor duty applies on top of existing MFN, Section 301 China, and Section 232 duties on the same product; miscalculating the stack is an easy way to under- or over-declare.

If you need help mapping which of your entries carry this duty, or want a second set of eyes on your protest strategy, reach out to our team — we can pull your entry history and flag exposure line by line.

Frequently Asked Questions

What are the Section 301 forced-labor tariffs and when did they take effect?

They are ad valorem tariffs USTR imposed on goods from roughly 60 economies for failing to impose or effectively enforce a ban on importing goods made with forced labor. The tariffs took effect July 24, 2026, one day after USTR announced final action on July 23, 2026.

What duty rates apply and to which countries?

A 10% rate applies to economies that already ban forced-labor imports, have committed to doing so under an Agreement on Reciprocal Trade, or run a partial enforcement regime, including Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the United Kingdom. A 12.5% rate applies to all other investigated economies, with the European Union, Japan, South Korea, Switzerland, and Taiwan facing rates set relative to their MFN duty.

Who is challenging the tariffs, and on what grounds?

Two small U.S. importers represented by the Liberty Justice Center sued on July 24, 2026, the day the tariffs took effect. Twenty-five state attorneys general led by Oregon filed a separate Court of International Trade complaint, State of Oregon v. Trump (Court No. 26-03467), on August 3, 2026. Both argue the tariffs exceed USTR's authority under Section 301 and were adopted as a pretextual replacement for the Section 122 balance-of-payments tariffs that a court had already ruled unlawful and that expired the same day the forced-labor tariffs began.

What happens at the September 30, 2026 hearing, and should I keep paying the duty in the meantime?

The Court of International Trade has consolidated the related cases and is scheduled to hear oral argument in a representative case on September 30, 2026. The hearing does not pause tariff collection, and CBP continues to assess the 10% or 12.5% duty on covered entries. Importers should keep paying the assessed duty while separately preserving refund rights through a timely protest, since a favorable court ruling is unlikely to automatically refund duties paid by importers who did not take procedural steps to preserve their claim.